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July 24th - Marcel Thieliant, Head of Asia Pacific at Capital Economics, stated that the Bank of Japan (BOJ) may be more pessimistic about Japanese economic activity and is likely to keep interest rates unchanged at its meeting next week. Thieliant noted that although the BOJ believed in June that downside risks to economic activity had diminished, "we believe that the subsequent resurgence of oil prices has dampened the central banks optimism." Thieliant added that the BOJ will "certainly maintain its view that inflation risks are skewed to the upside." Capital Economics expects the BOJ to raise its policy rate to 1.25% in October.July 24th - SK Hynix and Samsung Electronics are about to face scrutiny from investors regarding memory chip demand. Currently, the South Korean stock market has become a key indicator of global AI market sentiment, but it is experiencing significant volatility driven by leveraged chip trading. Japanese competitor Kioxia will also release updates, addressing the issue of its market capitalization halved in just a few weeks, highlighting the continued risk of market volatility amid growing concerns that the AI-driven rally has gone too far. HSBC analysts point out that rising high-bandwidth memory (HBM) prices and the launch of the more expensive HBM4 chip, crucial for AI development, should support the performance of Samsung and SK Hynix, thus alleviating investor concerns about a slowdown in profits in the second half of the year.Hong Kong-listed AI stocks saw some gains, with Zhipu (02513.HK) rising over 10%.The yield on Japans two-year government bonds rose 1.5 basis points to 1.505%, hitting a new high since May 1995.On July 24th, the highest 7-day annualized yield of Tencent Wealth Managements "Current Account +" was 1.4950%, and the lowest was 0.7420%. The highest 7-day annualized yield of WeChat Pays "Lingqian Tong" was 1.0130%, and the lowest was 0.9240%. The highest 7-day annualized yield of Alipays "Yuebao" was 1.0620%, and the lowest was 0.9640%.

After a Strong Rise Supported by the BOE's Dovish Guidance, EUR/GBP Floats Above 0.8700

Alina Haynes

Dec 16, 2022 11:57

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Following Thursday's trading above the important resistance level of 0.8700, the EUR/GBP pair is exhibiting range-bound behavior during the Tokyo session. After the Bank of England (BOE) sounded dovish on policy advice and the European Central Bank (ECB) announced a hawkish forecast for interest rates, market participants engaged in aggressive cross buying.

 

As expected, BOE Governor Andrew Bailey increased interest rates by 50 basis points (bps) to 3.25 percent. The inflation rate in the United Kingdom is in double digits, and the struggle against persistent inflation will continue for an extended period; hence, policy tightening is essential.

 

As direction for future monetary policy actions, the BOE noted that "the majority of the Monetary Policy Committee (MPC) feels that more bank rate increases may be necessary." The British pound has been subjected to great pressure due to the lack of clarity surrounding future policy tightening. Voting on the interest rate decision, policymakers supported the status quo because they regarded the current interest rate policy to be adequate for fighting inflation.

 

As predicted, ECB President Christine Lagarde raised interest rates by 50 basis points in relation to the Eurozone. Due mostly to rising food prices, the Eurozone's central bank expects inflation to remain well above its 2% target for a lengthy period of time. The ECB has upped its interest rate peak forecast because it anticipates two additional 50 basis point rate hikes.

 

The release of Retail Sales statistics for the United Kingdom will be significant for future forecasting. According to the forecasts, the yearly economic statistics (Nov) would likely decline by 5.6% compared to the previously reported 6.1% decrease. While the monthly data will decline from 0.6% to 0.3%, they were 0.6% in the previous report.


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